What is meant by a deductible in insurance?

A deductible in insurance refers to the specified sum that the insured must pay out-of-pocket before the insurance coverage kicks in. This amount is predetermined and is part of the agreement between the insurance provider and the insured individual. Once the insured has paid the deductible, the insurance company will then begin to cover eligible expenses according to the terms of the policy.

Understanding the concept of a deductible is crucial, as it impacts how much an individual will need to pay for medical expenses before receiving assistance from their insurance provider. For instance, if a person has a health insurance plan with a deductible of $1,000, they will need to incur $1,000 in medical expenses before their insurance starts covering additional costs.

In contrast, the other options do not accurately describe what a deductible is. The amount an insurer pays per claim relates to coverage terms rather than the insured's responsibility. The agreed-upon cost for routine procedures pertains to established rates for common treatments rather than an individual's obligation. Lastly, the final payment after all claims are processed refers to a different part of the claims process, not the deductible amount that must be satisfied first. Understanding the role of a deductible helps individuals make informed decisions about their healthcare and financial planning.